An influx of new clients has bolstered Guernsey’s portfolio with figures as of the end of March 2014 revealing that there are a total of 790 international insurers licensed on the island, comprising 243 limited companies, 70 protected cell companies (PCCs), 439 PCC cells, 8 incorporated cell companies (ICCs) and 30 ICC cells.
An influx of new clients has bolstered Guernsey’s portfolio with figures as of the end of March 2014 revealing that there are a total of 790 international insurers licensed on the island, comprising 243 limited companies, 70 protected cell companies (PCCs), 439 PCC cells, 8 incorporated cell companies (ICCs) and 30 ICC cells.
This compares to a total of 752 international insurers being licensed by the Guernsey Financial Services Commission (GFSC), at the end of March 2013, which means there was net growth of 38 entities during the 12 months. This also means there has been net growth of 32 entities in the first three months of 2014, as there was only 758 international insurance entities licensed in Guernsey at the end of December 2013.
Further data on some of the more newly licensed entities also shows that their owners’ geographical origin is approximately split into thirds: one third from the UK; one third from the Cayman Islands; and one third from other jurisdictions including Ireland, Luxembourg, Switzerland, Bermuda, the US, Singapore, South Africa and Australia.
The country prides itself on strength in depth across both the insurance and investment sectors, which means that Guernsey is ideally placed to serve as a ‘one-stop-shop’ for potential investors, able to deal with every facet of a transaction. The island also has its own recognised stock exchange, the Channel Islands Securities Exchange.
Unlike some of its competitors, Guernsey is able to provide investment funds internally as well as expertise on entities such as catastrophe bonds.
The island currently has a large cat bond in the pipeline although, due to the private nature of these types of entities, the details remain under wraps at the time of printing.
Although Guernsey has long been thought of as a traditional captive domicile, this continuing evolution and geographical expansion is thanks, in part, to new entities related to insurance-linked securities (ILS) transactions, as well as the steady stream of more conventional captive insurance vehicles.
Fiona Le Poidevin, chief executive of Guernsey Finance, explains: “It was a relatively organic process.”
“Aon moved into this space around 10 years ago and the industry has since grown to include newer captive managers such as Robus, which conducts a lot of ILS business.”
“The industry itself has seen a boost and there is a record high in the ILS market. Fitch recently stated that there is a record amount of capital in the market and this growth could continue. Guernsey currently has the most ILS companies listed on the stock exchange outside of the UK. Despite this, a potential manager cannot go into ILS lightly, and a great deal of s advice is required from actuaries and insurers alike.”
ILS vehicles in Guernsey are regulated under the normal insurance law, while the investment division of the GFSC regulates any investment funds, under the securities law. But there are a number of conditions, depending on what types of funds are being set up and the identity of investors.
Le Poidevin goes on to say that “sophisticated institutes such as reinsurers and specialist outfits that understand the asset class itself” tend to invest in ILS vehicles.
This sophistication is exemplified by the bespoke nature of the ILS, and as each entity is tailored to suit the individual owner, it becomes more lucrative for advisors and clients alike, as the structure they have works to their specifications exactly.
Despite the complexity of these structures, many potential investors are now being tempted into the market after seeing ILS successes in Guernsey and, to a lesser extent, Bermuda and New York.
Le Poidevin says: “Our work is more bespoke than many of our competitors, though we attempt to make it as accessible as possible. Bermuda may have more off the shelf, simple transactions but Guernsey has seen more bespoke structures and therefore we see a lot of variety. There is continuing growth in our ILS market and the figures speak for themselves.”
“We are continuing to see growth in the number of captives coming to the island and we are keen to show that Guernsey is not a one trick pony when it comes to insurance.”
“We have a variety of structures across the industry and, because we have over 20 captive managers on the island, there is a huge amount of expertise.”
